Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Highway2Heel]

The Panasonic news sure didn’t hurt...

 

[Mich]

I guess my 705 Feb 21 calls are ITM soon...

 

[Yonki]

What critics fail to grasp is that Tesla is a literally technically-minded problem-solving juggernaut.

That’s one of the best one-line descriptions of Tesla I’ve ever heard.

 

[TheTalkingMule]

Thank you everyone else for your Super Bowl ads

 

[Huskyf]

Warning Toyota we are coming !!!!

 

[Mike Smith]

Ihor called it on Friday:

Ihor Dusaniwsky on Twitter

 

[gerebgraus]

There were no questions about the GF1 business on Panasonic's call, but they were asked about their cylidrical cell business in Japan.

Japan cylindrical cells Panasonic comments:

• In the Japan operation around 10% of cylindrical cells are for non Tesla business including storage & heavy equipment - this part is really hurting.
• S/X reduction in sales is having greatest impact YTD but from Q2 to Q3 (Tesla's Q4) S/X is recovering. And we are told by Tesla S/X is an important premium model for Tesla. We understand Tesla is making various efforts to improve this business. Currently we expect continued recovery going forward.
• S/X business is profitable.

Panasonic also finalised its Prismatic cell JV with Toyota. In this agreement they are both transferring staff and assets into a JV which will be owned 51% Toyota and 49% Panasonic. This JV will then pay Panasonic some IP royalty fees (I guess Panasonic is keeping some old battery patents at parent company).

Unfounded speculation warning:
I still think Tesla should buy Panasonic's cylindrical business as quickly as possible. At the least, the GF1 business. Primarily for the employees who can be used to build and train Tesla's staff on its own future in-house cell lines.
If Tesla did buy Panasonic's GF1 business, there may be a high chance the agreement includes ongoing IP payments to Panasonic in Japan in return for parts of the IP in the cylindrical cell production process (at least for the parts which Tesla/Maxwell have not improved through in-house R&D).

Tesla has a fair number of battery patents. Could implicit cross-licensing of IP be sufficient? I assume that Panasonic has explicit or implicit agreement with other major battery makers not to patent litigate against each other.
Could Tesla be a target for patent litigation from other battery makers? Or Tesla's battery patent portfolio is sufficient to deter litigation?

 

[Derek Vinyard]

So Tesla is now buying (or has bought) batteries from CATL, LG, Samsung, and Panasonic. That's everyone. Something tells me there's no demand problem..

agree. The article says that this agreement suggests a two year period for Tesla to obtain batteries from them although, obviously, there is no cap on the quantity Tesla may order. And the agreement is, compared to Panasonic´s "at a smaller scale" - same goes for LG Chem.

 

[Artful Dodger]

I did these charts quickly, so please let me know if anyone sees an error with my numbers:

Q1 2020 - Profit from Most Recent 4 Qtrs
Yahoo has Q1 2020 Net Income consensus at about 39m.
This is short of what is needed in Q1 for S&P500 inclusion.
See table below.
Telsa needs about $160m in Q1 2020 to get the profitablity needed. Possible but unlikely.
View attachment 507325

Q2 2020 - Profit from Most Recent 4 Qtrs
Once the ugly Q1 2019 is gone from the calculation, 4 Qtr profitablity is basically certain in Q2 2020
Yahoo has Q2 2020 Net Income Consensus at $85m and this get Telsa about $372m in the most recent 4 Qtrs.
See table below
View attachment 507326

The biggest surprise for Q4'19 was a $80M hit to GAAP profit for CEO stock-based compensation (SBC).

Do you know if that expense was related to a portion of the upcoming 1st tranche of Elon's stock options due to vest when TSLA is >$100B for 6+ mths?

There was also an unexpected FOREX profit of some $80M. Together, these two items swamped Q4'19 GAAP profits, but could easily swing the other way in Q1'20.

Cheers!

 

[TheTalkingMule]

This is gonna be surprising to most....no mention of TSLA in the CNBC "biggest pre-market movers".

 

[LST]

Slightly on topic:

To all of you new Teslanaires: These paper gains are a bummer, because you should not, and I mean not in a long time, sell, because the pain of missing out on yet another 10 bagger is huge. Speaking of experience, I have to admit I cashed out when the stock doubled from IPO to 38 and I felt soo smug. Sold again some at 120-ish, to buy for MS2013 with the gains, again smug / happy as hell. When it rose to 200 and above and then back to 170-ish, I bought all the shares I sold back on a much higher cost basis.

Now when I want to see some cash, I have a small playmoney account where I trade options / derivatives and such.

So don't change your way of life until your retirement, islands, yachts etc. are secured. This will happen sooner than we could ever dream of.

Of course not advice

 

[ReflexFunds]

The biggest unknown for Q4'19 was the $80M hit to GAAP profit for SEC SBC (stock-based compensation).

Do you know if that expense was related to a portion of the upcoming 1st tranche of Elon's stock options due to vest when TSLA is >$100B for 6+ mths?

There was also an unexpected FOREX profit of some $80M. Together, these two items swamped Q4'19 GAAP profits, but could easily swing the other way in Q1'20.

Cheers!

This has been discussed in several posts in the quarterly forecast thread.

@The Accountant might have extra insight or corrections here as I haven't followed stock option accounting closely, but my understanding is the expense its totally unrelated to share price and market cap.

Tesla reserves for each tranche of the stock options based purely on whether they think the operational milestone will be met and then splits the cost of this tranche over a number of years (i think generally 4).

Tesla's total maximum cumulative P&L cost for the stock options award is fixed at $2,283m - this was the value of the 20.3 million performance conditioned warrants issued (with expected maturities up to 10 years) on the grant date.

Different tranches had different value at grant date depending on probability of achieving the operational goal and how far out of the money the market cap threshold was in March 2018.

Tesla has so far been expensing for the first 3 tranches of the the stock awards at a cost of $56m per quarter.
The change in Q4 was that a 4th performance goal is now expected to be achieved and cumulative cost of this fourth tranche since the grant date in March 2018 had to be booked for $72m. So this $72m for tranche 4 was 1.75 years worth of catch up - or $10m per quarter.

So Q120 should return to an Elon bonus expense of $56m for the first three tranches plus $10m for the fourth tranche - so $66m (down from $128m in 4Q19).

I don't think any extra expense will have to be booked at all when the market cap thresholds are actually met and when the stock is actually issued.

In future, when further operational milestones are first considered probable of achievement, the catch up expense will be <$10m * number of quarters since 1Q18, and the normalised addition to quarterly cost will be + <$10m. (<$10m because future tranches will all have lower value than tranche 4 because the probability of achievement at grant date was lower).

I'm not sure if the 4th operational milestone which triggered in Q4 was $35bn revenue or $4.5bn EBITDA, but ideally $35bn revenue, $4.5bn EBITDA and $6.5bn EBITDA will all be considered likely by the end of 2020.
If these two extra milestones are booked in 2020, one off catch up cost should be $120-140m and run rate cost should increase to $80-85m. Overall it means a maximum of ~$480m Elon bonus cost booked in 2020 vs $295m in 2019.

Most likely Elon bonus costs will be down $62m QoQ in Q1 to $66m.
However if Tesla decide the fifth operational goal is now likely (whichever of $35bn revenue and $4.5bn EBITDA they haven't already done) then it should be up ~$10-20m QoQ to ~$138-148m.

 

[StealthP3D]

I really wish sites would stop conflating BEVs with PHEVs, given the comparatively tiny battery needs for PHEVs, and the fact that they're just a transitional tech regardless. It's bad enough that a simple raw numbers perspective also gives no sense how how much various companies' EVs are relatively short range compliance EVs rather than legitimate substitutes for an ICE vehicle.

I have found this aggravating for some time as well. I really don't give a sugar about plug-in hybrid sales because they will be going away soon enough. The fact that they need regular oil changes means they should be lumped in with ICE sales!

Do you have a sense of the origin of this tendency to lump PHEV's with BEV's?

 

[mongo]

The biggest unknown for Q4'19 was the $80M hit to GAAP profit for SEC SBC (stock-based compensation).

Do you know if that expense was related to a portion of the upcoming 1st tranche of Elon's stock options due to vest when TSLA is >$100B for 6+ mths?

There was also an unexpected FOREX profit of some $80M. Together, these two items swamped Q4'19 GAAP profits, but could easily swing the other way in Q1'20.

Cheers!

In depth coverage over here:
Near-future quarterly financial projections
Starting at
Near-future quarterly financial projections

 

[Favguy]

Slightly on topic:

To all of you new Teslanaires: These paper gains are a bummer, because you should not, and I mean not in a long time, sell, because the pain of missing out on yet another 10 bagger is huge. Speaking of experience, I have to admit I cashed out when the stock doubled from IPO to 38 and I felt soo smug. Sold again some at 120-ish, to buy for MS2013 with the gains, again smug / happy as hell. When it rose to 200 and above and then back to 170-ish, I bought all the shares I sold back on a much higher cost basis.

Now when I want to see some cash, I have a small playmoney account where I trade options / derivatives and such.

So don't change your way of life until your retirement, islands, yachts etc. are secured. This will happen sooner than we could ever dream of.

Of course not advice

Agreed, I do have a tranche I'm going to sell soon to fund a comfortable lifestyle (nothing flashy, just normal) over the next three years to get my wife out of a job she now hates. My core holding isn't accessible until retirement at least 3.5 years away in any case and I'm happy to wait a year or three beyond that, so that temptation is thankfully removed. A ten bagger from here means a retirement beyond my wildest (admittedly modest) dreams!

 

[Fact Checking]

I have found this aggravating for some time as well. I really don't give a sugar about plug-in hybrid sales because they will be going away soon enough. The fact that they need regular oil changes means they should be lumped in with ICE sales!

Do you have a sense of the origin of this tendency to lump PHEV's with BEV's?

The practice of counting PHEVs as EVs originates from ICE OEMs: it's a marketing and incentives scam and fraud - we won't be able to get rid of it overnight.

By counting PHEVs as "green" vehicles they get state financing and tax breaks to build more ICE factories. Their customers get "EV" incentives, crowding out BEV buyers. It also gave them and the media a false sense of progress on "electrification". BMW still thinks of themselves as a leader in electrification...

But it's a scam: PHEVs are the worst of the two worlds that have slowed electrification.

 

[Lessmog]

$657.64 in the premarket, new all-time high I think?

New premarket ATH, but there was a $659.8 print in the Q4 ER after-hours trading.

Edit: $660.50 - new ATH.

Keep going ...

 

[LYTRIDR]

I have found this aggravating for some time as well. I really don't give a sugar about plug-in hybrid sales because they will be going away soon enough. The fact that they need regular oil changes means they should be lumped in with ICE sales!

Do you have a sense of the origin of this tendency to lump PHEV's with BEV's?

I don't speak with any authority on this, but the US Federal tax credit for EV's was available for both PHEVs and BEVs. This may have linked these together for reporting and therefore in the public consciousness.

 

[Artful Dodger]

$500M traded already in the Pre-Market. That's on 742K shares.

 

[sdtslafan]

Ask the Athletes: Hottest new car in NFL: Tesla

This was my favorite Super Bowl commercial. Any idea how much this costed Tesla?